Easton floats refinancing Canal Museum's debt

Under the proposal, the city would take a $550,000 loan to reduce museum's interest rate, improve cash flow.

November 12, 2012|By JD Malone, Of The Morning Call

Hank and George, the mule tandem who pull the canal boat in Hugh Moore Park, need a little help paying the mortgage.

Easton officials are proposing to refinance the National Canal Museum's long-term debt in a move to benefit both the city and the museum. Easton would consume the museum's $550,000 of debt and refinance it at half the interest rate — 3 percent — for five years.

The loan plan will be presented to City Council at its regular meeting Wednesday night.

Tom Stoneback, the museum's executive director, said the loan gives the museum some breathing room and allows it some time to complete its reorganization. The museum moved from Two Rivers Landing to the Emrick Center in Hugh Moore Park in January to accommodate the city's and Crayola's wishes to consolidate the Centre Square property under Crayola's banner.

Refinancing the museum's debt, according to Stoneback, will save about $15,000 a year. According to city documents, the museum will pay the city $2,375 a month for five years – after which the balance of the debt is due.

"It will allow the museum to set up a successful business model," Stoneback said.

Easton Mayor Sal Panto Jr., said the city would tap its reserve fund, which earns less than one percent interest in a bank account. Panto said the proposal allows the city to earn more interest while supporting a worthwhile cause.

"The good news is, the city has an opportunity to help them out," Panto said.

Glenn Steckman, city administrator, said the city offered to sit down and discuss financial assistance with the museum once it moved from Two Rivers Landing and settled into the Emrick Center. Stoneback said the move cost the museum at least $135,000 a year in revenue.

Panto added that using the city to refinance the debt protects the assets of the museum in case of default. The Emrick Center, the collateral for the $550,000 loan, is built on city property. The city also launched an initiative earlier this year to better maintain and clean up Hugh Moore Park, which hugs the Lehigh River from downtown Easton to Bethlehem Township.

Stoneback said the savings from the refinance will be used to create more programming. He added that the city is offering a considerably lower rate than the museum could get from a commercial bank.

"That money needs to be spent on the kids," Stoneback said of the museum's outreach to local schools and educational programs.

Steckman said if City Council approves the refinancing at its regular meeting Wednesday night, the deal should close by the end of the year.